Last Updated : 20 December 2010 at 16:05 IST
Silver output, consumption to soar in China
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According to a new research report from China Research Intelligence (CRI), an important feature of China's silver market is that the domestic price is higher than international market price.
“Domestic price of silver in China is not completely synchronized with the international price and it lags behind with too large fluctuation, resulting in increasing risk of downstream silver consuming enterprises,” says the report.
The CRI report said that China urgently needs to improve the formation mechanism of domestic silver price and seek appropriate trade modes to maintain values and avoid risks. It will be the general trend to introduce silver futures.
Here are some highlights on the China silver production and consumption:
**In 2009, the world's silver output was 21,500 tons, increasing by 0.40% over 2008; renewable silver output was 5,500 tons, increasing by 2.70% over 2008; the government undersold 375 tons, reducing by 31.80% over 2008.
**In 2009, global supply of physical silver was 27,375 tons, rising by 0.20% over 2008; the total supply of the world silver market is expected to reach 29,000 tons in 2010.
**In 2009, the total output of China's mineral silver and regenerate silver was 10,348 tons, maintaining No.1 in the world. Nonferrous metal enterprises are the backbone of the Chinese silver production, accounting for 90% of total silver output. In recent years, the rapid increase in the production of lead, copper and zinc in China becomes an important reason for rising output of China's silver.
**In China, such regions as Hunan, Henan, Jiangxi, etc. are the largest ones with concentrating production of refined lead and refined copper. Henan Yuguang Gold & Lead Group, Jiangxi Copper Co., Ltd., Hunan Xinda Silver Industry Co., Ltd., Yunnan Copper (Group) Co., Ltd., Hunan Chenzhou Jingui Non-ferrous Metal (Group) Co., Ltd., etc. are enterprises with most silver output in China.
**In terms of demand, although silver has made progress in the applications of automotive exhaust catalyst handling, conductive silver ink market, photovoltaic cells, solar energy, radio frequency identification and medical antibiosis, such electrical & electronics fields as silvers used in the electrical & electronics industry, silver-base alloys and silvers used in solders are still the uppermost silver consumption fields.
**Due to the insufficient domestic market demand in China and the rapid development of the lead, zinc and copper industries, the amplification of byproduct silver production far exceeds that of consumption, annual surplus of a large amount of silver are consumed by export, and China has become one of the most important silver suppliers in the world. However, in 2008, influenced by the abolition of silver export rebates, China's silver exports saw a continuing decline in 2008-2009.
**As the investment threshold of silver is much lower than that of gold, the silver investment market is tipped for a big future. In addition, as China suffered serious inflation in 2008, there is much room for the development of the silver investment market from the perspective of reserve assets.
**Currently, since China's domestic silver industry obtain surplus, it is more suitable for medium and small investors to invest silver products with a low investment threshold. A major problem now is that silver products suitable for public investment are relatively few and require development of relevant enterprises, in which lies enormous investment opportunities.
**Silver consumption mainly concentrates in industrial applications and investment demands. Currently, 65% of the world's total silver consumption comes from industrial fields. Accordingly, with the recovery of the world's economy, the silver demand from industrial fields is expected to increase steadily.
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